Chile Power Tender Nets Six, $38/MWh Offers

• Chile’s 2025/01 power tender for 3,360 GWh draws $38/MWh bids and hybrid solar-storage, with awards imminent—promising cheaper power, disciplined interconnection, and flexible PPAs across the north-center grid.

Chile’s 2025/01 power tender, seeking 3,360 GWh a year for regulated customers from 2027–2030, drew six bidders, with headline offers starting at $38/MWh. An award is slated today, with a possible second-stage decision tomorrow, signaling confidence in Chile’s rules and its north-to-center grid integrating additional solar and storage.

The auction’s zonal blocks and hourly bands favor hybrid portfolios: daytime solar shaped by batteries, backed by wind or contracted imports for evenings and winter. That design enforces interconnection discipline along the Atacama-to-SIC backbone. For lenders and corporates, robust competition points to lower delivered costs, storage buildout, and PPAs that value flexibility.

What does $38/MWh signal for storage buildout and hybrid portfolios in Chile?

- Confirms bankable economics for multi-hour batteries: bids at $38/MWh imply 4–6 hour BESS co-located with solar can clear long-tenor, UF-indexed supply at utility scale.
- Pushes portfolios toward true hybrids: daytime PV shaped by BESS plus firming from wind (south/center) and limited cross-zonal transfers to meet evening/winter blocks.
- Accelerates storage capex deflation targets: developers will need installed BESS costs in the low $300s/kWh (or better via DC-coupling and shared balance-of-plant) to preserve margins.
- Normalizes DC-coupled design: clipping capture, shared interconnection, and reduced losses become standard to hit delivered-cost thresholds.
- Drives longer-duration optimization: 5–6 hour batteries become the new baseline in the north; 3–4 hour may suffice where wind complementarity is strong.
- Increases value of nodal diversity: mixing Atacama PV with central/southern wind reduces imbalance penalties and lowers reliance on congested corridors.
- Elevates curtailment arbitrage: BESS monetizes surplus midday energy otherwise stranded by congestion, improving project netbacks without new lines.
- Strengthens lender comfort with storage revenue: energy shifting plus firming obligations create predictable cash flows, supplementing sufficiency payments and ancillary services.
- Sets a competitive PPA price anchor for C&I: corporates will reference the tender price, spurring hybrid PPAs that explicitly price flexibility and availability by hour/season.
- Encourages overbuild and redundancy: slight PV over-sizing and excess storage capacity hedge penalties and seasonal variability at low marginal cost.
- Tightens interconnection discipline: portfolios with proven dispatchability and congestion management will outcompete pure-play solar.
- Shifts OEM selection toward LFP and high-cycle warranties: round-trip efficiency, degradation guarantees, and augment plans decide winners at razor-thin spreads.
- Boosts merchant cannibalization risk management: hybrids will prioritize contracted delivery first, using remaining cycles for merchant spreads only when congestion eases.
- Brings transmission timing into investment cases: storage is a near-term workaround, but portfolios that align with planned reinforcements capture upside.
- Catalyzes consolidation: only balance-sheet developers and funds with cheap capital and construction prowess can consistently deliver sub-$40/MWh hybrids.
- Incentivizes local O&M and augmentation hubs: to maintain availability and warranty compliance over long contracts, service localization becomes a cost lever.
- Signals policy traction for standalone storage: even co-located wins validate the revenue stack and should accelerate standalone BESS participation under updated rules.
- Raises bar for imports and thermal backup: contracted imports or residual gas will play a narrower, price-capped role as hybrids shoulder evening ramps.
- Highlights permitting and community as critical path: schedules and social license now matter as much as equipment pricing to meet firm-hour obligations.